Credit reports, credit scores and the three reporting bureaus
This is Part 1 of a two-part blog post on this topic, and Part 2 completing this post will be published in a few weeks.
A robust credit report and a high (or at least medium to high) credit score are important because they have very real, practical effects on your life. They can affect your ability to get a mortgage, rent a home, own or lease a car, obtain a personal loan or insurance policy, obtain a job or credit card, and other financial matters dependent on your credit history and the rated quality of your personal credit.
Each of the three major national credit reporting bureaus in the United States—Equifax®, Experian™, and TransUnion LLC—separately and continuously collect your personal financial history to compile your credit report, which is used to determine your credit score. Just like people, companies can inadvertently make mistakes, and sometimes these mistakes can be serious, with harmful consequences. An error in a credit report can damage a credit score and cause problems lasting for years if the mistake isn’t corrected completely.
Get and review a copy of your credit reports from all three reporting bureaus
Under the Fair Credit Reporting Act (FCRA), which is federal legislation, consumers are entitled to obtain one free credit report annually from each credit reporting company, including those mentioned above. To request a copy of a credit report, go online to annualcreditreport.com and follow its instructions to request a report, or call 1-877-322-8228. That site is authorized by the federal government to provide free annual credits reports as required under the FCRA.
While Federal law grants annual access to credit reports to consumers, “the three national credit reporting agencies — Equifax, Experian, and TransUnion — have permanently extended a program that lets you check your credit report at each of the agencies once a week for free.” according to this Consumer Alert from the United States’ government agency, the Federal Trade Commission (FTC): You now have permanent access to free weekly credit reports | Consumer Advice (ftc.gov).
Not all creditors report to all three agencies; consequently, their reports may have similar data but they are not exactly the same. If you’re doing a credit report review, it’s a good idea to get a copy of your credit report from each company—Equifax, Experian and TransUnion.
Look carefully for mistakes in each part of each report, and keep a detailed record of anything that seems wrong, such as what should be a single payment that is listed twice, or a payment that was made but is not showing up. Also check to see if your name is, if there is an incorrect current or former home address and if the details are wrong for a previous or current employer. Potential errors could be current or recent history, or many years in the past, so a slow review is a good idea. Once you’ve completed your reviews of the reports and have your notes on the errors, it’s time to work on having them corrected.
Before beginning your credit report repair activities, it is important to understand that:
- By federal law, you can dispute mistakes or outdated details on your credit reports at no cost. No credit reporting bureau or creditor should charge you any fee for fixing incorrect information they have on you. It is not necessary to pay any company to act for you in getting your credit report information current and accurate.
- Also, by U.S. law, both credit bureaus and any company that provided financial information about you—about financial actions, accounts, legal judgements or your financial status with specific companies—to a credit bureau are legally responsible for making corrections on inaccurate or incomplete information in your credit report.
- If you believe wrong information on your credit reports is the result of illegal fraud and identity theft, then you should also report the scam and identity theft to the U.S. Federal Trade Commission (FTC) and law enforcement agencies, including the local police. Besides the FTC, internet-related crime may also be reported to the U.S. Federal Bureau of Investigation‘s (FBI) Internet Crime Complaint Center (IC3).
- Many protections for consumers involving credit information are codified under the Fair Credit Reporting Act; “The federal Fair Credit Reporting Act (FCRA) promotes the accuracy, fairness and privacy of information in the files of consumer reporting agencies. There are many types of consumer reporting agencies, including credit bureaus and specialty agencies (such as agencies that sell information about check writing histories, medical records and rental history records).” The U.S. government’s Consumer Financial Protection Bureau summarizes those protections in the document “A Summary of Your Rights Under the Fair Credit Reporting Act”.
How should you start getting your credit reports corrected?
First, request a correction in your credit reports. The FCRA gives you the option of requesting the correction from either the credit reporting companies or the creditor who furnished the information to them. Creditors may include (but not be limited to) retailers; financial institutions such as banks, credit unions, and brokerage firms; credit card issuers; landlords; mortgage lenders; an auto dealer that has provided a car loan; as well as many other types of companies that provide products and services.
To correct mistakes with a credit reporting agency, specify and dispute the incorrect information in the report with the major credit reporting bureau (or bureaus)—Equifax, Experian and TransUnion, LLC.
According to the U.S. government agency the Consumer Financial Protection Bureau (CFPB), consumers should initially contact the credit reporting bureau(s) by writing in a letter (not an email) sent through certified U.S. Postal Service mail to simply and clearly explain what you think is wrong, why, and include copies of all the documents that support your dispute. A hard-copy letter can be traced and verified as being delivered when sent via certified mail, and many federal government agencies use the U.S. mail for most of their official correspondence with consumers because it is traceable. Note that Equifax, Experian and TransUnion will also accept disputes online or via telephone, which may be faster and more secure than a letter.
Also use the credit bureau’s official dispute form (if they offer one on their website) and—this is essential to do—keep photocopy records of everything you send them.
The Consumer Financial Protection Bureau (CFPB) offers some downloadable tools available for consumers, including detailed instructions and template letter to use as a guide. Several of the credit reporting bureaus have dispute forms that may be downloaded from their websites; some website information is provided below in this post.
Just some of the CFPB’s detailed advice for the contents of a dispute communication are to:
- Include full, specific contact information for the letter’s sender, including complete name, home address and preferred telephone number.
- Add any uniquely identifiable information for the report, such as a confirmation number and dates for when it was requested and received.
- Simply list every mistake, including account numbers, dates, payments (including overpayments, duplicate payments and missing payments), debt amounts, home addresses, legal names for you and companies and any other error that you have noted.
- Explain clearly why you are disputing the information in the report.
- Request that the information be deleted or corrected and provide the information that should replace the inaccurate content.
- Enclose a copy of the sections of your credit report that contain the disputed facts and circle or highlight each of the disputed items so they stand out visually.
- Always include photocopies of any documents that support your position but not original documents.
Other documents or information could be needed—each bureau may have unique requirements that should be researched by checking with the bureaus’ websites or contacting them at phone numbers or email addresses that may be listed at each site.
This post continues in “How to Correct Errors on Your Credit Report—Part 2” to be published in a few weeks.
Looking for more information on managing credit, credit reports, credit scores and related topics?
For more information that may help you manage your costs and finances, look into the free Delta Community Financial Education Center webinars on a range of practical, “how to” topics that could potentially help save you money and enable you to better manage your income, financial assets and life. Please visit the Financial Education Center's Events & Seminars page to review and register for its monthly on-demand webinars.
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Visit the BALANCE™ website to learn about their education and assistance programs. Members can also speak with certified credit and housing counselors to get personalized guidance.
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